Are You a Strong Competitor?

Some small businesses are lucky enough to not have much direct competition. Maybe they’ve identified a previously-unknown niche. Or maybe they are so dominant in their market that others can’t squeeze in. But not even these small businesses are safe from a smart competitor who can sweep in and steal away large swaths of customers.

To be a strong competitor and grow market share, small businesses need to continually improve. Identify your top competitive weakness and fix them– before your competitors do! Give your customers reason to stay loyal to you, and you can reasonably insulate your business from competitive threats.

Here are some questions to ask yourself to find your small business’s competitive weak points.

Competitive Strength Analysis

  • Existing Customers: What do customers complain about? What steps have you taken to improve their experience?
  • New Customers: How many new customers did you get in the last year? The year before? Make sure you have a plan for new customer growth.
  • Product/Service Offerings: When was the last time you improved your product and service offerings? Lack of innovation leaves the door wide open to competitors.
  • Profit Margins: Do you have any “unexpected costs” that occur frequently? How do these affect your margins and what can you do to allay them?
  • Vendors and Partners: Are your partners helping you grow? Or do they promote more-of-the-same?

After answering these questions, you probably see several areas for improvement. Pick the most critical, and start working on them right away!

The Great Shrinking Business Model

As a business model, Redbox is on its way to completely replacing Blockbuster. And the company has accomplished this goal in a remarkably short time period. Examining the two business models reinforces the importance of creativity, flexibility and appealing to changing market demands in our own businesses.

Redbox wins this competitive fightLaunched in 2002, Redbox is the company placing movie and game rental kiosks in prominent places around the country (i.e., those ubiquitous red boxes). Blockbuster, of course, is the retail chain with a similar function founded in the 1980s and enjoying success through the early 2000s.

From Redbox’s about page, one learns there are 34,600 Redbox locations in the US, and 68% of the population lives within a 5-minute drive of one. Blockbuster, meanwhile, boasts of just 2,500 stores across the entire globe– down from 6,500 stores in 2010. Clearly, Redbox is on the ascendency.

I call this competition the great shrinking business model. For local movie and game rental, Redbox learned that a kiosk could take the place of an entire retail store. It was quite a revolutionary business decision to implement a strategy that relied entirely upon glorified vending machines.

But the model certainly makes business sense. In a convenience-driven market where almost all consumers own and use credit cards, renting a movie for about $1/day on the way home from the grocery store is easy to understand and simple to do. Selling through a kiosk also allows consumers to rent media 24-hours-a-day.

By taking advantage of evolving consumer behavior, Redbox benefits from a streamlined overhead– with fewer employees, drastically reduced leases and lower insurance rates than required to run a full-size retail store. These optimizations allow Redbox to offer the exact same product as Blockbuster more conveniently and for a cheaper price.

Blockbuster is the market loserSome might argue that the experience of interacting with a movie buff employee at a retail movie rental store makes the visit worthwhile. Perhaps, but it seems that the corporate nature of Blockbuster killed that experience along with the neighborhood video rental store  years ago. My last experience at a Blockbuster included an uninterested employee mumbling “hi” to me without even lifting his head out of box of movies he was sorting. Frankly, I feel the kiosk is more friendly.

By analyzing the business models, it comes as no surprise that Redbox is quickly eliminating the market need for Blockbuster. This rapidly shrinking business model should make you think about your industry– are you the clever innovator or the stodgy competitor about to be taken by surprise?

Be Good, Businesses

The plumber ruined my plaster ceiling.

A year later, the roofer broke my deck.

Does this look right to you?

Does this look "right" to you?

They both told me, “I want to make this right.” Then, they did everything in their power to avoid paying. (With limited success. I’m pretty tenacious.)

In the age of word-of-mouth marketing, with Angie’s List, Yelp and girlfriends getting together for coffee, how could any business person be so short-sighted to think shirking a responsibility today would result in profit tomorrow?

Honesty and virtue are key ingredients to long-term success. It sounds old-fashioned, because there’s nothing new about being a good business with good people.

Dishonesty can lead to short-term gains–remember Enron?–but ultimately ends in business disaster. For the plumber, I wrote a reasonable yet scathing review of his business and chose one of his dozen competitors to be my go-to plumber. As for the roofer, I related my story to friends and neighbors, so they can make informed decisions in the future. I’m just one home-owner, but my influence extends beyond my own purchasing needs.

And the same is true of your customers. Each day, your customers are evaluating your dependability and trustworthiness. They are sharing their opinions with friends and family. Their opinions carry more weight than the most perfectly-designed marketing campaign.

So, be good. Do the right thing.

Your business will profit from it, and so will your conscience.

P.S. Bonus: The effects of unethical business decisions extend further than word-of-mouth. If you have customers who won’t pay anything until the last jot and tittle of the contract are fulfilled, they’ve likely been treated badly in the past. They feel the need to protect themselves. And who can blame them? We’ve all heard the lie at sometime or other, “I want to make this right.”

Small Business Marketing as Entertainment

Can witnessing the inner workings of small businesses be exciting? Anyone who operates a small business certainly knows it can be. Watching ABC’s Shark Tank is a fascinating study in small business marketing, business analysis, financing and negotiation. If you haven’t seen the show, here’s the premise:

“Budding entrepreneurs with big ideas can still make their dreams come true and ABC is about to give them the chance to make it happen. Each week a group of self-made millionaires [Sharks] from all corners of the business world take their own hard earned money and offer everyday people their one true shot at making their dreams a reality. Some will sink, some will swim and some will be eaten alive.”

The show’s investors (or “Sharks”) are start-up and entrepreneurial experts. Small business owners can learn a wealth of free knowledge from these investors.  In the final episode of Season 2, watch some interesting and instructive entrepreneurs as they wheel and deal with the sharks. There’s a custom jewelry artist trying to take his designs to the masses. Another woman has patents for a brilliant shoe design that lets women change the uppers while using the same sole– perfect for traveling.

In this clip, a woman makes the case to reposition her maternity clothing brand in face of a declining boutique women’s market. But, as the sharks adeptly conclude, this strategy will require as much investment as building a new brand from nothing (and in a still-persistent tough economy, no less):

From a marketing perspective, it’s interesting how many entrepreneurs benefit from the show just by making the pitch and explaining their innovative products to television audiences. These entrepreneurs might make a deal, or they might not, but the exposure does wonders for their marketing. It’s a good strategy, and I recommend it for charismatic entrepreneurs selling a great consumer product.

Having all those sharks devouring her desserts helped Daisy Cakes‘ founder Kim Daisy sell a lot of cake. And Rebecca Rescate of CitiKitty may not have overly impressed the sharks, but her great presentation certainly won over many cat lovers, causing shipping delays from the high order volume. Watch her presentation below:

I definitely recommend this show to small business owners. It’s rare that you get free advice that’s worth more than you pay for it.

Small Business Marketing Podcast – Implementation Tips

As I wrote in a recent article on implementing small business marketing strategies, “keeping at it,” is one of the hardest things to do in business. So many distractions and “emergencies” get in the way of fulfilling our well-planned strategies.

In this podcast, I offer several tips for small businesses looking to improve their implementation skills. Listen or download below:

Small Business Marketing Implementation

Download the small business marketing implementation MP3 file here. (4.7MB)

Small Business Strategy Podcast

David Weatherholt of “Getting Down to Business” invited me on the show to talk about small business strategy and planning. Usually, small business owners think of themselves as firefighters, spending their days putting out many small fires and neglecting the important work of developing a future strategy.

But making these everyday decisions doesn’t have to be difficult and time-consuming for small businesses. By developing an effective future strategy, the answers to these dilemmas become clear. I use the example of a fictitious company, SunBurst Coffee, and how they use their “picture of success” to facilitate decision-making.

To hear more advice, listen or download below:

Small Business Strategy

Download the small business strategy MP3 file here. (4.7MB)